Good day, ladies and gentlemen, and welcome to the Synalloy’s Fourth Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct the question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder this conference call maybe recorded. I would now like to introduce your host for today's conference Mr. Craig Bram. Synalloy’s President and CEO. Sir you may begin.

Good morning everyone. Welcome to Synalloy Corporation's fourth quarter 2016 conference call. Dennis Loughran, our CFO is with me today as well. Dennis will provide a review of Q4 and the year-end financials and I will provide some commentary on what we are seeing so far this quarter across our various businesses. We will then open the call to questions. Dennis?

Hello everyone. As usual the financial results will be presented using three different methods, one GAAP based EPS, two adjusted net income and non-GAAP measure as defined in earnings release and three adjusted EBITDA. A non-GAAP measure also defined in earnings release. Also since we did incur a small charge related to discontinued operation, all amounts referenced will be for continuing operations only. Fourth quarter GAAP based losses were $1.4 million or $0.17 per share, as compared with a net loss of $17.7 million or $2.04 per share in the fourth quarter of 2015. Significant differences in the year-over-year performance includes, Q4 of last year includes a pre-tax loss of $17.16 million related to goodwill impairments for Palmer of Texas at $15.9 million and specialty pipe and tube $1.26 million respectively. The reasons for which were fully described in prior disclosures. Last year's Q4 also includes a one-time casualty insurance gain of $0.92 million related to settlement of fire loss claims at Palmer of Texas, compared to no such amount in this year's Q4. Q4 of this year had a pre-tax inventory loss of only $0.19 million as compared to an inventory loss of $2.01 million in Q4 of last year. The LCM adjustment for this year reduced the inventory loss by $0.24 million as compared to the LCM adjustment last year increasing the inventory loss by $0.23 million. Q4 of this year included favorable net one-time adjustments and amortization of prior period manufacturing variances totaling $689,000 Q4 of this year included $82,000 of losses in expenses related to the sale leaseback transaction compared to no cost for that item last year. Year-to-date GAAP based losses were $7 million or $0.81 per share as compared with the loss of $10.3 million or $1.18 per share in the 12 months of…

Thanks, Dennis. As mentioned previously, we believe that 2016 represents the bottom of the most recent cycle for both the metals and chemical segments. We are seeing positive signs through the first two months of this quarter and are optimistic that we can achieve the 2017 plan as outlined in the earnings release. Let me discuss in some detail what’s been going on in each of the operating segments. The team over seeing the Marcegaglia transaction worked very hard to complete the closing on schedule. We have now turned our attention to the integration portion of the process. The response from our customers has been positive as several were jacking to make sure they have access to adequate supply. As largest domestic producer of welded stainless steel pipe and chemical tube, we are in a very favorable position when North American demand returns to more normalize levels. The Marcegaglia acquisition includes seven laser mills, which operated at a distinct cost advantage to TIG mills. And will allow Bristol Metals, to not only be the low cost producer in North America, but will also position the business unit to effectively compete with imports on smaller OD products. Demand for stainless steel pipe and mechanical tube has remained subdued so far this quarter. North American demand in 2016 was basically at the same level as 2015, with both years down about 18% from 2014. We are optimistic that higher energy prices will support new capital expenditures in the downstream energy markets. And that under the new administration we will see infrastructure spending in general at much higher levels than recent years. While there was little change in average nickel prices in the last two quarter of 2016 and continuing into the first quarter of this year. Surcharges on the other hand have…

[Operator Instructions] And our first question comes from the line of Mike Hughes of SGF. Your line is now open.

Good morning, thanks for taking my question. First, just one point of clarification, the net income number you put out there, that is not an adjusted number it’s a GAAP number that includes some anticipated charges, is that correct?

Net income is a GAAP number, correct. What was your last part of question -- some anticipated charges what do you mean?

I think in the reconciliation of the net income build up there is about $1.1 million in acquisition related charges. So, normally companies would add that back. You haven’t done that in the number that you presented in the earnings release, correct?

For the guidance figure?

Correct.

Yes the guidance includes that as an expense in the period and then we should have -- and our typical adjustment for that would to pull that out. So, it maybe something I got to look at, because we typically would add back to one time charges in the adjusted EBITDA net income. So, you may have found a -- something we have to confirm. Thank you very much.

Okay. And then just the fixed and good guidance on metals side of the business I was just wondering do you have any adding color on the project side, I think you have a LNG project, is that still on track to ship in the first quarter and then what’s kind of baked in for the balance of the year?

Yes Mike, the LNG project, we shipped very little of that in January, and we shipped about a third of it in February. And so the balance will primarily be in March as you get the bulk of that out in March. As far as project activity goes, right now on the stainless steel pipe side, it’s still pretty light. At the end of February, we did start to receive a number of stocking enquiries. So that's the first time really in quite a while, I’m not sure if that's necessarily because of demand that our distribution customers are seeing. I think part of it has to do with our purchase of Marcegaglia and the distribution customers wanting to make sure that they are kind of inline and have their position in order to get their supplies in place. So it could be a combination of those things, but we have seen in the last couple of weeks in particular a pickup in stocking enquiries.

Okay, great. And then just the Palmer business, I think you give some metrics on order growth, but did you mention what the revenue was in the December quarter and kind of how that ramps in 2017? And what the expansion of that line does for your capability as far as production is concerned?

Yes let me try and answer that for you. If you go back and look at the second and third quarters Palmer’s revenue was averaging about $1.03 million or $1.04 million a month. And the bookings were running at about the same rate. And then once we got into Q4 starting in December we saw the bookings jump to about $2.5 million of tank value. And in January we also had $2.5 million booking. And then in February we booked over $3 million in tank value. So it's been on a pretty dramatic ramp and a lot of that is probably been driven by not only the completion of uncompleted wells, but if you look in the Permian in January the drilling permits were up about 45% over the previous monthly averages of the prior five months. So there is a lot of permit drilling activity going on in and around the Andrews location. The $8 million in bookings in three months obviously that's a $32 million annual run-rate. We haven't seen that kind of level of activities until you go back to 2014.

What is baked into the guidance and what the capacity expansion what does that do for your ability as far as quarterly production is concerned?

The additional paint and blast line I don't know that I can tell you from a standpoint of increased capacity. The reason we're doing that is I think as the E&P guys are using longer laterals on their horizontal drilling, it means that coming up out of the same well you have a greater quantity of fluid. And so they're going for these larger 21/6 barrels 1500 barrel tanks. And those larger steel tanks take longer to paint, longer to blast. And so they can resolve in some chock points in that part of our operation. So by adding the second paint and blast line that second line is really going to be devoted to the larger tanks. So I think it will allow us to push more product through the facility, but I wouldn't view it as a dramatic increase in capacity, but more of a step that we're taking to deal with changing tank design and size requirements.

Okay I see. And I assume you've baked in a more modest number for Palmer than $32 million in your guidance for '17 is that correct?

Yes sir.

Okay. And then one last one for you, I may have missed it but do you have a CapEx number for 2017?

I think it's about $3.5 million.

Normal maintenance GAAP CapEx.

Yes, there is no significant gross CapEx in there other than the paint and blast line at Palmer. And over at CRI with the new three year contract for the fire retardant that customer is going to provide the capital for about a $500,000 expansion that will include some expansions to the tank farm there. Some filtration equipment and a couple of other odds and ins that CRI will need to produce that product.

Okay, great. Thank you very much.

And just to clarify the Marcegaglia acquisition a big piece of that was buying equipment that would theoretically have been CapEx under -- it’s an asset purchased basically. So a big piece of the Marcegaglia acquisition price was for capacity expansion. So that may show up as CapEx investment on our cash flow when it’s recorded.

Okay I appreciate it.

And Mike I did want to clarify on the guidance in the press release, we only mentioned net income the GAAP number and adjusted EBITDA. So we didn't present that adjusted net income format like we do on historicals. Hence if we have presented that format we absolutely would have added back those acquisitions and integration costs, but it's not presented in that table.

Okay, terrific. But we could calculate it on our own, I just wanted to make sure I was doing the calculation correctly. I appreciate the time.

If you looked at our historical methodology and followed it you get pretty close to right number.

Thank you very much.

Thank you. [Operator instructions] And I’m showing no further questions at this time. I’d now like to turn the call over to Mr. Craig Bram for closing remarks.

Thank you. As always we appreciate everyone’s continued support and we are looking forward to improved results in 2017. Thank you very much.